"The no tax on tips provision in Republicans' massive tax and spending law signed by Trump in July eliminates federal income taxes on tips for people working in jobs that have traditionally received them and allows certain workers to deduct up to $25,000 in qualified tips per year from 2025 through 2028. The deduction phases out for taxpayers with a modified adjusted gross income over $150,000."
"Among the jobs exempted from tax on tips are sommeliers, cocktail waiters, pastry chefs, cake bakers, bingo workers, club dancers, DJs, clowns, podcasters, influencers, online video creators, ushers, maids, gardeners, electricians, house cleaners, tow truck drivers, wedding planners, personal care aides, tutors, au pairs, massage therapists, yoga instructors, skydiving pilots, ski instructors, parking garage attendants, delivery drivers and movers. The tip must be voluntarily given, so mandatory tips or auto-gratuities would not qualify for the no tax on tips benefit."
The Treasury Department submitted proposed regulations to the Federal Register that define which occupations and payments qualify for a no federal income tax on tips provision. The provision eliminates federal income taxes on tips for workers in traditionally tipped roles and permits certain workers to deduct up to $25,000 in qualified tips annually from 2025 through 2028. The deduction phases out for modified adjusted gross incomes above $150,000. Tips must be earned in Treasury's list of qualified occupations and be voluntarily given. Mandatory tips and auto-gratuities do not qualify; reported, voluntary tip pools may qualify. The benefit excludes married individuals filing separately and excludes digital assets and proceeds from illegal or sexual services.
Read at www.mercurynews.com
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